Aged Assets

What Does it Mean?
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Equipment that has outlived its useful life. Aged assets might include equipment that is still functional, but is expensive to operate and maintain; equipment that still works, but breaks down frequently, disrupting operations; or equipment that is broken and is too expensive to repair. Proper management of aged assets is a significant issue in industries that rely heavily on equipment, such as the oil and natural gas industry

Investopedia Says:
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Not only is it expensive to maintain and replace aged assets, they can also create serious safety hazards and disrupt operations if they fail. Aged assets, particularly those used for defense, transportation, manufacturing and construction, can sometimes be cost-effectively remanufactured to make them useful and efficient again.

Five Percent Rule

What Does it Mean?
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A regulation that requires a broker to use fair practices and ethical guidelines when setting the commission rates. The five percent rule stipulates that the broker can change the commission percentage by 5%, either up or down, but can only do so if the change can be legally justified. The rule also applies to other transactions, including proceeds sales and riskless transactions.

Investopedia Says:
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The five percent rule is one of the rules of fair practice set forth by the National Association of Securities Dealers (NASD), and which must be followed by members of the organization. The rule itself does not set forth any calculation criterion. Instead, it indicates that the broker should follow guidelines. The rule itself has several exceptions.

Basel III

What Does it Mean?
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A comprehensive set of reform measures designed to improve the regulation, supervision and risk management within the banking sector. The Basel Committee on Banking Supervision published the first version of Basel III in late 2009, giving banks approximately three years to satisfy all requirements. Largely in response to the credit crisis, banks are required to maintain proper leverage ratios and meet certain capital requirements

Investopedia Says:
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Basel III is part of the continuous effort made by the Basel Committee on Banking Supervision to enhance the banking regulatory framework. It builds on the Basel I and Basel II documents, and seeks to improve the banking sector's ability to deal with financial and economic stress, improve risk management and strengthen the banks' transparency. A focus of Basel III is to foster greater resilience at the individual bank level in order to reduce the risk of system wide shocks

Power Broker

What Does it Mean?
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An individual who, through his or her connections, is able to influence the decisions of other parties. A power broker is typically an industry insider, and is familiar with other individuals and groups able to exert influence or make decisions. Power brokers may be elected officials, business leaders or individuals who are "connected".

Investopedia Says:
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Because of the influence power brokers have on an organization's decision makers, they are able to command high fees and the attention of individuals, organizations and companies looking to make headway with a particular project or goal. For example, industry lobbyists and media personnel familiar with the ins and outs of a particular issue are able to reach and influence decision makers faster than those who are unfamiliar with key players.

Invitation For Bid - IFB

What Does it Mean?
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When a company or organization provides detailed project specifications and allows contractors to send in their proposals indicating how much the project will cost to complete. Because the focus of the invitation for bid is on the bidder's price for project completion, there is less emphasis on the bidder introducing its own ideas. This separates the IFB from a request for proposal (RFP).

Investopedia Says:
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Companies typically choose the qualified bidder with the lowest bid. Going with the lowest bid can result in issues if the contractor isn't of sufficient quality, so it is important for the company creating an IFB to be very clear in what qualifications a bidder should possess and what the project specifications are.

Because a well-written IFB does not focus on the bidder producing ideas, the bidder can focus on the potential costs associated with completing a project and can produce a bid faster.

Hedge Fund Manager

What Does it Mean?
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The individual who oversees and makes decisions about the investments in a hedge fund. Managing a hedge fund can be an attractive career option because of its potential to be extremely lucrative. To be successful, a hedge fund manager must consider how to have a competitive advantage, a clearly defined investment strategy, adequate capitalization, a marketing and sales plan and a risk management strategy..

Investopedia Says:
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Individuals wishing to invest in hedge funds must meet income and net worth requirements. Hedge funds can be considered high risk because they pursue aggressive investment strategies and are less regulated than many other types of investments. The hedge fund manager is responsible for the investment decisions and the operations of the fund.

Chinese Hedge

What Does it Mean?
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A position that protects investors from risk, involving a short position in a convertible security and a long position in its underlying asset. The Chinese hedge looks to capitalize on mispriced conversion factors. The trader will profit when the underlying asset depreciates, diminishing the premium on the convertible security.

Also known as a "reverse hedge".

Investopedia Says:
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The Chinese hedge is a type of convertible arbitrage. A convertible security, such as a bond with an option to convert into shares, sells at a premium to reflect the cost of the option. The trader hopes that the underlying asset will drop in value, making the short position on the convertible profitable. By hedging his short position through longing the underlying, the investor is protected by large appreciations.

This is the opposite of executing a "set-up hedge".